FMLC report on continuity concerns in legacy contracts post-Brexit
On 6 August 2018, the Financial Markets Law Committee (FMLC) published a paper, UK Withdrawal from the EU: Issues of Legal Uncertainty Arising in the Context of the Robustness of Financial Contracts.
An important question that has been raised in the context of a hard Brexit scenario is whether the performance of existing – sometimes called “legacy” – financial contracts would continue or whether Brexit would make their performance illegal, impractical or impossible in some way. The FMLC paper looks at this question and highlights the legal uncertainty which will arise if there is no clarity as to the future of the UK / EU relationship post-Brexit.
The FMLC concludes in its paper that, for the most part, it agrees with the European Commission’s communication of July 2018 and considers it unlikely that Brexit will give rise to issues of contractual continuity in a general sense and so far as it is a matter of English law and jurisdiction. However, the FMLC explores in the paper the potential consequences where authorisations are lost without adequate alternatives (chapter 4) and how these issues may be mitigated (chapter 5).